With little in the way of fresh fundamental signals from which to take a cue, natural gas futures took the path of least resistance lower Friday as traders pressured the market back below key support at $4.00. The July contract led the way, tumbling 5.9 cents to close at $3.979, just a tick off its $3.98 opening trade for the week. Estimated volume was extremely light, with just 39,677 contracts changing hands.

For many sources, Friday was a day to take a look back at last week’s tumultuous price-action. A more than 50-cent rally on Monday and Tuesday was methodically eroded Wednesday through Friday by commercial and local profit-taking. Fundamentals definitely had their say in the price picture last week. The first forecasts for warmer-than-normal weather put traders into the buying mood early in the week, but that fervor quickly dissipated when fresh storage data was released Wednesday.

According to the American Gas Association, 105 Bcf was added to underground storage facilities during the week ending June 8, bringing supplies up to 46% full at 1,503 Bcf. Not only was the injection figure more than the year-ago refill (78 Bcf) and the five-year average (82 Bcf), but it also was in the upper end of the 90-110 Bcf range of consensus estimates circulating ahead of the report. Storage now stands 73 Bcf above year ago levels and 22 Bcf above the five-year average.

Looking ahead, traders and market watchers question whether the market was able to once again inject more than 100 Bcf into the ground last week. Citing forecasted cooling degree data from the National Oceanic and Atmospheric Association (NOAA), Thomas Driscoll of Lehman Brothers expects the AGA will announce a net build last week of 95 Bcf this Wednesday. And while an injection of that magnitude would be the smallest weekly build since the middle of April, it would likely still carry a bearish message because it would so easily surpass last year’s 64 Bcf as well as the five-year average refill of 86 Bcf.

However, fundamental factors such as weather and storage are not the sole indicators of the market’s direction. Also of undeniable influence are technicals, which are mixed to bearish right now. “The weekly chart does not look too bad,” reasoned Tom Saal of Pioneer Futures. “[Last week] we notched a higher high, a higher low and a higher settle. That’s three for three on the weekly chart. What I do not like is that the July contract closed just off its weekly low at $3.92 notched Friday.”

Another undeniably bearish signal is that July came back down to close for the week beneath support at $4.00 after spending most of the week above that level. For many traders, that is a signal that prior lows at $3.72-73 and $3.67 will likely be tested this week. A break of those levels could result in a move to the $3.50 area.

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